Sally Beauty Supply 2011 Annual Report Download - page 63
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Please find page 63 of the 2011 Sally Beauty Supply annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
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Description of Net Sales and Expenses
Net Sales. Our net sales consist primarily of the following:
•Sally Beauty Supply. Sally Beauty Supply generates net sales primarily by selling products through
its stores to both retail customers and salon professionals. Sally Beauty Supply sells products for
hair color and care, skin and nail care, beauty sundries and electrical appliances. Because
approximately 44% of our Sally Beauty Supply product sales come from exclusive-label brands,
most of these same products are generally not available in most other retail stores or in our BSG
business segment. Various factors influence Sally Beauty Supply’s net sales including local
competition, product assortment and availability, price, hours of operation and marketing and
promotional activity. Sally Beauty Supply’s product assortment and sales are generally not seasonal
in nature.
•Beauty Systems Group. BSG generates net sales by selling products to salons and salon professionals
through company-operated and franchised stores as well as through its network of professional
distributor sales consultants. BSG sells products for hair color and care, skin and nail care, beauty
sundries and electrical appliances. These products are not sold directly to the general public and are
generally not the same products as those sold in our Sally Beauty Supply stores. Various factors
influence BSG’s net sales, including product features and availability, competitive activity,
relationships with suppliers, new product introductions and price. BSG’s product assortment and
sales are generally not seasonal in nature.
Cost of Products Sold and Distribution Expenses. Cost of products sold and distribution expenses consist of
the cost to purchase merchandise from suppliers, less vendor rebates and allowances, and certain overhead
expenses including purchasing costs, freight from distribution centers to stores and merchandise handling
costs in the distribution centers. Cost of products sold and distribution expenses are also affected by store
inventory shrinkage, which represents products that are lost, stolen or damaged at the store level.
Selling, General and Administrative Expenses. Selling, general and administrative expenses consist
primarily of personnel costs, commissions paid to professional distributor sales consultants, benefits,
utilities, property maintenance, advertising, rent, insurance, freight and distribution expenses for delivery
to customers, administrative costs and costs associated with our corporate support center.
Interest Expense. Interest expense includes the amortization of deferred debt issuance costs and is stated
net of interest income. Interest expense is primarily associated with debt incurred in connection with the
Separation Transactions.
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